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Second Mortgage Defaults Post Sudden Increase

According to data released by ""S&P Indices"":http://www.consumercreditindices.standardandpoors.com and ""Experian"":http://www.experianplc.com, the default rate on second lien mortgages has increased for the first time in at least five months.


The agencies' report shows second mortgage defaults rose from 1.42 percent in March to 1.51 percent in April. First mortgages, on the other hand, saw a decrease in default rates, down from 2.33 percent to 2.16 percent.

These results are based on data extracted from Experian's consumer credit database, which is populated with individual consumer loan and payment data submitted by lenders to Experian every month.


Experian's base of data contributors includes leading banks and mortgage companies and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders. The default indices are developed jointly by Standard & Poor's and Experian.

""We had seen default rates fall across all major categories and most major cities during the prior six months, but given April's data, that might be coming to end,"" said David M. Blitzer, managing director and chairman of the index committee for S&P Indices.

""The real question is whether April was temporary, or are household balance sheets worsening?"" Blitzer continued. ""… Like most economic recoveries, while there will be general trends, we do expect to see differences across loan classes and regions.""

Among the five major metropolitan statistical areas reported in this release each month, Los Angeles and New York had the largest decrease in overall consumer defaults rates, falling to 2.57 percent and 2.11 percent, respectively.

Chicago and Dallas followed with their default rates decreasing to 2.48 percent and 1.56 percent, respectively. Miami's consumer default rate increased to 5.40 percent from 5.33 percent.

About Author: Heather Cernoch


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